What Is a Life Insurance Beneficiary? Why Is It Important to Designate One?


The main points to remember about a beneficiary:

  • You choose the beneficiary who receives the life insurance death benefit.
  • You can have multiple beneficiaries receiving equal or varying amounts.
  • Naming a beneficiary helps you direct the distribution of payable death benefits.
  • You can change the beneficiaries and benefit payout structure at any time. 

Q:  I’d like to know more about selecting a beneficiary on my life insurance policy. I have very specific ideas on where I want the death benefit to go. What are my options? 

Denise Wardwell is a Farmers Insurance® agent in Houston, Texas. Here’s what she tells customers about designating a beneficiary. 

When you purchase life insurance, you’re providing a financial benefit to someone if you die. Naming that person as your beneficiary allows you to choose where your policy’s payable death benefits go when you die. When you select a beneficiary for your policy, it becomes part of a binding contract between you and the insurance company, not part of your will and not a decision left up to probate courts or your next of kin. 

You can designate more than one beneficiary, and you can choose how much of the death benefit goes to each person. For example, you could have three beneficiaries, with one receiving 50 percent of the benefit and the other two receiving 25 percent. The number of beneficiaries and the amount allocated to each is totally up to you. 

You can change your beneficiaries at any time during the life of the policy. For instance, you might want to update your beneficiaries if you get married, have a child or make other changes in your life. I invite customers to meet with me every year to review all aspects of their coverage, including beneficiaries. 


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